Labor Market Dynamics when Unemployment is a Worker Discipline Device PDF Download
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Author: Miles S. Kimball
Publisher:
ISBN:
Category : Employment (Economic theory)
Languages : en
Pages : 44
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Book Description
Efficiency wage models of the effort elicitation type have important implications for labor market dynamics. These models have a wide array of discontinuous sunspot equilibria driven by extraneous variables, in addition to well-behaved equilibria characterized by continuous, slowly adjusting patterns of employment. Many aspects of actual labor markets can be replicated by these models. For example, the longer-run movements they predict in employment allow macroeconomic evidence for a large labor supply elasticity to be reconciled with panel data evidence for a small labor supply elasticity. Many testable, but as yet untested predictions about labor market dynamics can also be generated.
Author: Miles S. Kimball
Publisher:
ISBN:
Category : Employment (Economic theory)
Languages : en
Pages : 44
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Book Description
Efficiency wage models of the effort elicitation type have important implications for labor market dynamics. These models have a wide array of discontinuous sunspot equilibria driven by extraneous variables, in addition to well-behaved equilibria characterized by continuous, slowly adjusting patterns of employment. Many aspects of actual labor markets can be replicated by these models. For example, the longer-run movements they predict in employment allow macroeconomic evidence for a large labor supply elasticity to be reconciled with panel data evidence for a small labor supply elasticity. Many testable, but as yet untested predictions about labor market dynamics can also be generated.
Author: Miles Kimball
Publisher:
ISBN:
Category :
Languages : es
Pages : 23
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Author:
Publisher:
ISBN:
Category :
Languages : en
Pages : 43
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Author: Athanasios Orphanides
Publisher:
ISBN:
Category : Labor market
Languages : en
Pages : 9
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Author: George A. Akerlof
Publisher:
ISBN:
Category : Incentives in industry
Languages : en
Pages : 39
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In the most widely analyzed type of efficiency wage model of involuntary unemployment, firms pay wages in excess of market clearing to give workers an incentive not to shirk. Such payments in excess of market clearing and the resultant equilibrium unemployment act as a worker discipline device. This paper concerns what is usually considered the most important theoretical criticism of such models: the so-called bonding argument. The essence of the bonding critique is that contracts whereby workers pay a bond to the firm upon taking a job (or pay an employment fee to gain employment) can eliminate involuntary unemployment. Explicit upfront bonds are only quite rarely observed. A more subtle form of the bonding critique argues that implicit bonding through upward sloping wage profiles and other deferred payment schemes can perfectly substitute for upfront bonds in providing incentives not to shirk and thereby allow the labor market to clear. This paper shows that upward sloping wage profiles do not act as a perfect substitute for explicit bonds in a natural extension of the shirking model in which workers are finite lived, the monitoring of worker behaviors on the job is costly, and firms have reputations for honesty as employers. In the absence of direct upfront bonding, optimal payment schedules will be in excess of market clearing. The reason why upward sloping wage profiles that are market clearing will not generally be the optimal labor contract is simple: delayed payment may provide sufficient incentive to prevent shirking late in the life of the contract, but in the beginning of the contract it does not prevent shirking. And it turns out in a variety of stylized cases, it is cheaper for the firm to pay a wage premium rather than to accept worker shirking early in the contract. The implications of potential worker malfeasance in the absence of explicit bonds for compensation schedules, job assignments, and firm monitoring strategies over the course of a worker's career are also analyzed
Author: George A. Akerlof
Publisher:
ISBN:
Category : Deferred compensation
Languages : en
Pages : 56
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Author: Pierre-Richard Agénor
Publisher: International Monetary Fund
ISBN: 1451854781
Category : Business & Economics
Languages : en
Pages : 98
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This paper examines the role of the labor market in the transmission process of adjustment policies in developing countries. It begins by reviewing the recent evidence regarding the functioning of these markets. It then studies the implications of wage inertia, nominal contracts, labor market segmentation, and impediments to labor mobility for stabilization policies. The effect of labor market reforms on economic flexibility and the channels through which labor market imperfections alter the effects of structural adjustment measures are discussed next. The last part of the paper identifies a variety of issues that may require further investigation, such as the link between changes in relative wages and the distributional effects of adjustment policies.
Author: Carl Shapiro
Publisher:
ISBN:
Category : Equilibrium (Economics)
Languages : en
Pages : 82
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Author: George A. Akerlof
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Author: Jon Strand
Publisher:
ISBN: 9788257082857
Category :
Languages : en
Pages : 23
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